Banks target checking fees to find new ways to raise cash

As people shift from using credit cards to debit cards, banks need to find new ways to sock it to them. And it looks like they may have found one: higher checking fees. If you're not careful, these fees can add up to hundreds of dollars before you even know they hit you. To wit:

* Bank of America (BAC) will increase its monthly account maintenance fee on its MyAccess checking from $5.95 to $8.95 per month in June. It will also start charging a one-time fee of $35 if your account is overdrawn for five business days. And that's on top of the overdraft fees, the maximum number of which has also been raised. Last year, they would never ding you more than five times in one day; now, they can whack you up to 10 times.

* Citigroup (C) began charging 3 percent of the transaction for some debit card purchases and ATM withdrawals made outside the U.S. last year, up from 2 percent before. That now matches the cost of using credit cards. Citi also increased its overdraft fee to $34 per incident. It had been $30.

* SunTrust (STI) is charging a higher fee on its basic checking if customers overdraw multiple times. The bank also raised its overdraft fees on other accounts.

* Wachovia/Wells Fargo (WFC) is doubling to $10 its fee to transfer money to checking to cover insufficient funds on some accounts. It will also start charging that fee to a credit card rather than taking it from a linked bank account, so you could end up paying interest on that charge as well.

"They are supposed to act in the interest of shareholders, so they're gouging consumers," Sam Johnson, a former chief economist for the International Monetary Fund, told USA Today. He thinks banks are raising account fees because of a "mix of market power and opportunism."

While the U.S. government bails out these banks because they are "too big too fail," banks choose to use this power to take advantage of consumers who are struggling. The same consumers who are taxpayers that helped to bail out these banks.

Banks defend their choices by saying say consumers have become riskier customers with the higher unemployment rate. In addition, banks say their borrowing costs are higher -- which I really have to wonder about, given the trillions the government has pumped into the loan markets at this point.

The Fed is thinking about cracking down on some of these fee increases, but the weak rule now being discussed does not cap overdraft fees, does not require banks to disclose the overdraft interest rate and does not prevent them from manipulating the order of checks to maximize overdraft fees. (Banks commonly will clear the largest checks first, so the customer ends up with overdraft fees on lots of smaller checks.)

Bankrate.com says ATM fees, monthly service fees and balance requirements for interest checking accounts all hit record highs in 2008 before inflation. Bankrate predicts consumers should expect more of the same in 2009.

Have your fees gone up on your accounts? Are you thisclose to throttling the people who run your bank?

Lita Epstein has written more than 25 books including the Complete Idiot's Guide to Improving Your Credit Score."